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In the last post, we talked about new ways of financing, if you didn't want to / couldn't apply for a loan or get funding in the traditional way. For most people in relatively rich countries, it's easy to access to money. But what about the rest of us (actually the vast majority of people who live with us on this planet): people with lower socio economic status, and the population in developing countries?

Until not long ago, if a farmer in Kenia needed to buy another cow to support his family, his only chance was to take a loan from a local credit shark, to horrenduous conditions. Being forced to slip into lifelong slavery, because he never would be able to pay back the installments of often 500% per year.

The distribution of microlending changed all this, empowering the ones in need to take a loan to cheap conditions from a 'real' bank for the poor.

While the idea is centuries old, Muhammad Yunus was one of the first to make it widely known and used. He founded the Grameen Bank, which has lent $5.7 billion of loans, out of which $5.1 billion have been repaid (numbers from 2006) - a stunning 98.9% recovery rate. 96% of the customers who receive a loan are women. Yunus and the Grameen Bank received the 2006 Nobel Peace Price "for their efforts to create economic and social development from below". Here is a nice story and short summary about Yunus and the Grameen Bank: http://www.pbs.org/frontlineworld/stories/uganda601/history.html

Today, there are many thousand microfinance institutes, and they are changing the world by empowering the poor to take their fate in their own hands. Many entrepreneurs in developing countries are taking their chance and create an income stream for themselves and their families. Of course, there are also dark sides and criticism, but I believe in the power of this movement.

Some of these institutions even enable people to borrow money directly to a person in need, on the other side of the world, such as www.kiva.org. You can take $20, and look for a person or project around the world that you wish to support, e.g. a family in Peru wants to build an organic garden and needs $1.200. Once enough people have funded the project, the recipients get the money and can start buying stuff and working on it, with very low interest rate and fixed terms as of when the money needs to be paid back. For me, it's a very nice thing that with relatively few money, I can (contribute to) help someone who wouldn't be able to realize his / her project otherwise.

www.zidisha.org goes one step further: it connects lender and borrower directly, enabling a personal relationship and who knows, maybe even a friendship across continents.

With more and more people having access to the internet around the world, I expect this trend to increase proportionally within the next years. Let's hope that it keeps on making the world a better place.

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